The Foreign Exchange Administration Policies have
been liberalised to achieve the following strategic
objectives:

•

Malaysia as an Islamic Financial Centre

•

Financial Sector Masterplan

•

Capital Market Masterplan

•

Foreign Investment Committee Guideline

Effective 1 April 2007, the foreign exchange administration
rules will be liberalised to facilitate development of
the financial and capital markets. The table below summarises
foreign exchange administration policies prior to 1 April
2007 and now, with regards to resident and non-resident
individuals.

With the liberalisation, the overnight limit of licensed onshore banks for foreign currency accounts maintained by resident customers is abolished.

For policy no.2, before the liberalization, resident
customers with domestic borrowings who wanted to invest
in foreign currency assets were only allowed to convert
up to a maximum of RM100,000 in aggregate per calendar year for such investment. If purpose of opening the foreign currency account was for education, the cap was at USD 150,000, regardless of resident customers with/without domestic borrowings.

With the liberalisation, resident customers with domestic borrowings now have the opportunity to invest more in foreign currency assets as the previous limit of RM 100,000 has been increased to RM 1 million in aggregate per calendar year. The cap of USD 150,000 for education purpose remains for resident customers with domestic borrowings.

Further, resident customers are now allowed to open and maintain joint foreign currency accounts for any purpose.

As for policy no. 3, previously, joint accounts between
residents were only allowed if it was meant for either
education / employment abroad. Joint accounts for any
other reasons were not permitted, except with the prior
approval from the Controller. Following the liberalisation,
joint accounts between resident customers can now be
opened for any purpose without having to obtain prior
approval from the Controller.

Policy no. 4 states that a resident customer was allowed
to hedge foreign currency loan repayments only up to
24 months’ commitment. However, with the liberalisation
resident customers can hedge the foreign currency loan
repayment up to the full commitment of the loans.

In policy no. 5, a resident customer who wanted to
make foreign currency payments to another resident customer
was first required to obtain prior permission of the
Controller.
With the liberalisation, payments in foreign currency
between residents is allowed for settlement of foreign
currency products offered onshore, without the need
to obtain prior approval of the Controller.

For policy no. 6, a non-resident customer was allowed
only up to a maximum of 3 credit facilities from residents
to finance the purchase / construction of residential
/ commercial properties in Malaysia. With the liberalisation,
non-resident customers are now free to obtain any number
of credit facilities from residents to finance the purchase
/ construction of residential / commercial properties
in Malaysia.

What is domestic borrowing?

Domestic borrowing refers to any loan, trade financing,
hire purchase, factoring, leasing, redeemable preference
shares or other similar facility in whatever name or form,
but excludes:

•

Trade credit terms extended by a supplier for
all types of goods & services

•

Forward exchange contracts entered with authorised
dealers

•

One personal housing loan and one vehicle loan

•

Credit card and charge card facilities

To view more policies, please log on to Bank
Negara Malaysia's website at http://www.bnm.gov.my

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